Evolving Views On Outsourcing - InformationWeek

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Chris Murphy
Chris Murphy
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Evolving Views On Outsourcing

Collaborative relationship with its outsourcing partner to serve customers better

CEO Murphy outsourced to save Rockwell FirstPoint.
When Terry Murphy took over as CEO of Rockwell FirstPoint Contact Corp. four years ago, the provider of call-center-management software was losing money and sales were sliding. Murphy took a controversial approach: Embrace offshore outsourcing and lay off about a third of the staff as part of an effort to change the company's product- development strategy.

The transition was dramatic even for those employees who remained. For software programmer Eric James, giving up programming wasn't just a career shift, it was giving up part of who he is and how he thinks. "It's like people who do calculus for relaxation," he says. "I do coding to relax." James, pushing 40 and married with kids, was one of the lucky survivors of Rockwell FirstPoint's move to outsource work. He transitioned into technology management as the company laid off one-third of its 865 employees and sent most of its programming jobs overseas.

James understands why the company started a relationship with Mahindra British Telecom, an Indian-United Kingdom joint venture specializing in IT outsourcing for the telecom industry. James says no company or individual can resist the trends driving programming and white-collar work offshore. "With a larger portion of the coding going to MBT, it was the proper career move to move out of coding and into the higher-level view of the products," he says. "I was a lot more concerned about what's going to happen to my job."

Murphy and director of new solution development Sandy Biggam have made outsourcing a central part of Rockwell FirstPoint's product-development and IT-development strategy, in which helping people like James through career transitions is just one part of the challenge. Rockwell FirstPoint is several years and a few generations into developing its relationship with its offshore outsourcing partner. Many companies that are outsourcing will never go as deeply into their relationships as Rockwell FirstPoint. For business-technology leaders using offshore outsourcing and having to decide whether to increase its use, seeing where one company has gone and what it has been through might help.

Rockwell FirstPoint was built around automated call-distribution switches, or ACDs. Its suburban Chicago headquarters is near O'Hare International Airport--some of its first and biggest customers came from airlines' call centers in the area--and its clients range from FedEx Corp. to the U.K.-telecom company Orange.

The company's strategy and staff were built to deliver constant innovation to ACDs. When Murphy joined the company, he decided that strategy was the problem: A great ACD was increasingly taken for granted, as customers wanted to not just distribute calls, but manage interactions for the entire call center. "While we thought we were bringing great innovation to our ACD, that wasn't driving customers' decision-making," he says.

Rockwell FirstPoint's executives decided the company needed to be more focused on customer needs, including more-customized implementations. That meant they needed different skills than they had in-house. It also meant faster and more software development around specialities of telecom and call-center businesses. The company in 2001 hired MBT--a joint venture between Mahindra Group in India and British Telecommunications plc--because of its telecom specialization as well as its offshore cost advantages. Lower costs were part of the appeal, but Rockwell FirstPoint learned, like many companies, that lower costs aren't as compelling a reason as they initially appear. "There can be some uniquely false economies if you go to outsourcing just to get lower labor rates," Murphy says. "You're probably not going to get what you want."

Rockwell FirstPoint realized what many companies do--they didn't have the process-discipline and specification-writing skills to get built what they wanted built when they took away the over-the-cubicle communication channel. One example: Rockwell contracted with MBT to build software to let travel agents work remotely. The program that came back included most of the ways an agent might connect, such as cable modem and DSL. They took for granted that dial-up access would be included. It wasn't, because Rockwell didn't ask for it. "You slap your forehead and say 'I guess we didn't ask for it, so we didn't get it,'" he says. "But you wouldn't think you would have to specifically ask for it, because you're talking about occasional interaction with the call center," Murphy says. "You want to get mad at someone, but you don't know who to get mad at."

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